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Job creation remains uphill task in US
By Tom Raum |
February 22, 2010, Monday
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Print Edition
Print Edition
JOB creation in the United States is stuck on an uphill treadmill.
So many jobs have been lost that the US must run hard just to keep from losing more ground. Despite the election-year emphasis on job creation by both parties, the short-term outlook is bleak.
While many economists believe the recession is technically over, nearly 15 million Americans remain unemployed. Six million of them have been out of work for more than half a year.
President Barack Obama is asking for almost US$300 billion more for recession relief and job formation. The House last December passed a US$154 billion spending bill focused on jobs.
The Senate is due to debate a far more modest version today, but appears bogged down in partisan bickering.
With or without new legislation, reducing a jobless rate that's now just under 10 percent to pre-recessionary rates of about half that won't happen soon, as government efforts to prop up the economy begin to wind down.
It could take up to five years or more just to get back to even.
There are limits to how many jobs can be created by government action - either directly or with tax and other incentives for the private sector - and how quickly.
"We've gone though a period of enormous job loss," said Robert Shapiro, chairman of Sonecon, an economic advisory firm.
"The long-term problem is exacerbated by the fact that credit's still not available because we really haven't reformed the financial system. People don't have confidence in the future and people are poorer so demand is down. All these things are coming together," Shapiro said.
Returning to pre-recession employment levels and keeping up with working-age population growth will require the creation of 10 million or more jobs.
It's a very big order. Under the administration's own estimate, the economy will create an average of just 95,000 jobs a month this year and that's not enough to make much of a dent in the jobless rate.
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